Best Buy’s Lease-To-Own Program Under Scrutiny: Is It Preying On Vulnerable Shoppers?

Best Buy (BBY) has been offering a lease-to-own program under its Progressive Leasing platform that may be causing some financial woes for those customers that are already strapped for cash. The program has come under scrutiny not only by the customers that use it, but also by the very employees that offer it.

According to a report by The Washington Post, while the lease-to-own program allows customers to buy big-ticket items they may not be able to afford otherwise, they are often paying over two times the actual purchase price through Progressive Leasing.

Best Buy has touted the program, with CEO Corie Barry saying in a 2019 earnings call, “This is a great offer. It’s great for our brand. It’s great for our customers.” At the time Progressive Leasing was launched, it was expected to generate tens of millions of dollars in revenue for the company each year, the Post reported.

Employees of Best Buy aren’t as excited about the lease-to-own program as they reportedly think it preys on vulnerable shoppers.

“It feels abusive and gross,” a former assistant store manager, who was there for the program’s launch, told the news outlet. “You look at the terms and we are charging more than $2,000 for a $1,000 product."

While customers that use Progressive Leasing can pay off their balance early, they are still subject to the $79 fee, which a spokesman for Best Buy, Matt Furman, told the news outlet, “If it were not for a lease-to-own program at our stores, many of these individuals would be making these purchases from rent-to-own retailers or using payday loans. Our view is that these are clearly poor alternatives.”

Best Buy is not alone in offering a lease-to-own program to boost sales revenue. Retailers such as Target, J. Crew, Lowe’s, Big Lots, Kay Jewelers, and H&M also use similar programs.

Best Buy offers Progressive Leasing in 45 states and about 980 U.S. stores. The program is not offered in Wisconsin, New Jersey, Wyoming, Vermont, and Minnesota because of strict lease-to-own laws.

Shares of Best Buy stock were down 0.19% as of 12:54 p.m. EST on Thursday.